Service Tax dept threatens to impound all Kingfisher planes

Just hours after the government expressed dissatisfaction with Kingfisher Airlines' plans to invest Rs 650 crore to resume its operations as it may not guarantee an efficient and reliable service, the service tax department has issued a notice to the carrier, "impounding" all its aircraft.

According to the notice, the airline cannot fly outside the registered airport premises, CNN IBN said today.

According to the report, Mallya's personal jet was confiscated on December 21 by the Service Tax Department as Kingfisher had not passed on to the government Rs190 crore collected from passengers as service tax.

Kingfisher Airlines, however, in a late night statement, said "We categorically state that the Service Tax Department has not impounded any aircraft."

In December, the service tax department had seized three Kingfisher aircraft for non-payment of dues.

Four other planes of Kingfisher have also been taken back by US-based leasing company ILFC because of non-payment of lease rentals.

Mumbai airport authorities have also threatened to issue an eviction notice after the carrier failed to respond to an earlier notice asking it to clear the Rs. 22 crore dues towards parking and navigational charges.

Moreover, Kingfisher's revival plan had no provision for payment of airport operators, who want their dues to be paid before the airlines starts flying again. Government officials told PTI that the payment plan of due salary and wages of staff was in a phased manner, which "we felt may not lead to reliable services.

Yesterday, Mallya had written a letter to Kingfisher employees, who have not been paid for eight months now, after they threatened to file a winding up petition in the court under the Company's Act if the management did not share its revival plan with them. In his letter, Mallya said, "We have submitted a detailed restart plan to the DGCA which is in two parts. The first part deals with a limited re-start utilising 7 aircraft ramping up to 21 aircraft in 4 months. The second part is a full scale rehabilitation of our airline growing to 57 aircraft within 12 months of recapitalisation".

The letter, however, did not mention anything about the payment schedule of dues of the employees, but it said that "both plans contain detailed information on key assumptions and funding requirements, including payment of outstanding salaries to employees." The airline has not paid to its employees since May last year.